Thorntons sales rise over Christmas
In the 14 weeks to 12 January 2013 total sales increased by £4.5 million to £88 million.
Branded commercial sales grew by 26.4% to £34.7 million. The company’s share of the total boxed chocolate market increased from 11.7% to 12.1% and its share of the inlaid boxed chocolate market rose from 33.5% to 35%.
However like-for-like sales in Thorntons stores declined by 1.3% after three stores were closed in the quarter, leaving 27 fewer stores than a year ago.
Franchise sales declined by £1.1 million to £3 million, reflecting the administration of the company’s major franchisee in May 2012.
Online sales at Thorntons Direct also decreased, falling by £0.7 million to £4.8 million as the late deployment of the new website and a range of operational issues impacted sales.
While international sales grew by 69% to £2.1 million, private label sales saw a substantially increase to £2.5 million.
Commenting on the results, Jonathan Hart, chief executive, said: "We are pleased with the overall progress made during this key trading period. These results demonstrate the effectiveness of our multi-channel distribution model and our strategy to rebalance our routes to market and revitalise the business as a whole.
"We have grown market share and demonstrated the continued strength of the Thorntons brand despite a challenging economy and a weak confectionery market."
He continued: "We enter the second half of our financial year with profits in line with our expectations and ahead of last year. Our seasonal lines have sold through well, resulting in stock levels lower than anticipated and below last year at the period end.
"Our important spring seasons, in particular Easter, lie ahead of us and will be key to the outcome of the full year. We have strong trading plans for spring and an encouraging Commercial order book. We are confident in our strategy and the actions we are taking but remain cautious given the continuing challenge of the economic climate."
George Scott, retail consultant at Conlumino said: "Despite weak comparatives, this is a return to positive territory in total group sales for Thorntons, as it continues its transition to a mid-market wholesaler, against a headwind of declining relevancy in its traditional retail markets.
"While the 1.3% decline in LFL own store sales is less negative than in previous periods, as it closes stores in secondary locations, this is a weak performance for a retailer which relies on seasonal trade.
"However, on a more promising note, the impact of Thornton’s strategic on-going move to a wholesale business model is evident in a 24% increase in UK commercial sales. To this end, it can take confidence from an encouraging improvement in market share. This approach leaves Thornton’s well placed to benefit from the relatively consistent footfall at grocery outlets, compared to the high street locations of its retail outlets. Meanwhile, Thornton’s has gained momentum in international markets, as it focuses on developing commercial relationships in English-speaking countries. Strong performance, in Australia and South Africa especially, contributed towards international growth of 69% during the quarter.
"Overall, these results confirm Thornton’s continued demise as a leading UK retailer with a national store footprint. It will continue to experience shortfalls in trading performance over the next two years, as its turnaround plan is completed, and it manages its transition to a wholesale strategy. The brand has become increasingly less relevant with the UK retail audience; its new vision to focus on selling to the mass market through grocery multiples has undermined its exclusive credentials and ability to extract a premium on its product."
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